Mutual Agreement Procedures
In the course of cross-border activities, physical or legal persons can be subject to taxation measures by two or more States or Jurisdictions, which in turn can lead to double taxation not in accordance with Austria’s obligations under international treaties. In order to resolve such cross-border tax disputes, international (tax) treaties and Austria’s domestic law institute a mechanism aimed at resolving the dispute and ensuring taxation in accordance with the treaties by means of a mutual agreement between the States or Jurisdictions involved.
A mutual agreement procedure (MAP) in a particular case is a procedure which commences by request of a particular taxpayer or particular taxpayers and is aimed at the elimination of taxation not in accordance with the treaties for that particular taxpayer or those particular taxpayers. If the agreement sought cannot be reached within the time frame set by the particular treaty (see “Legal Sources” below) despite the best endeavours of the States or Jurisdictions, then the procedure ends without agreement. However, some treaties and domestic law foresee a right for the taxpayer(s) to request the arbitration of the dispute.
The goals of the MAP are:
- to ensure that the allocation of taxing rights agreed under the (tax) treaties is upheld;
- to eliminate the taxation not in accordance with the treaties for the taxpayer(s).
Double Tax Conventions (DTCs)
Austria’s treaty policy with respect to the MAP is to closely follow the OECD Model Tax Convention in its negotiation of DTCs. All DTCs concluded by Austria contain a MAP provision patterned after the Model Convention. In some cases, they also contain arbitration clauses which permit the binding resolution of a dispute despite an inability of the States and Jurisdictions involved to reach a mutual agreement (see Annex 3 to the MAP Guidance (PDF, 981 KB) issued by the Austrian Ministry of Finance).
EU Arbitration Convention
The EU Member States have concluded an Arbitration Convention, which only applies to transfer pricing disputes. If a MAP does not lead to an agreement fully eliminating the taxation not in accordance with the Convention within two years of the (full and detailed) submission of the case to one of the competent authorities of the States or Jurisdictions involved, then the competent authorities are required to set up an advisory commission which will issue an opinion on the resolution of the dispute. The two-year deadline can be postponed with the agreement of the taxpayer(s).
EU-Tax Dispute Resolution Act (EU-TDRA)
The EU-TDRA (EU-Besteuerungsstreitbeilegungsgesetz, “EU-BStbG”), which has been in force since 1st September 2019 and is applicable for taxable years beginning in 2018, is the Austrian implementation tax act of the EU Dispute Resolution Directive. The EU-TDRA foresees a MAP ending in a mandatory binding resolution for intra-EU cross-border tax disputes resulting from different interpretations or applications of DTCs or the EU Arbitration Convention. Once a taxpayer submits a request for dispute resolution under the EU-TDRA, their access to the MAP under DTCs or the EU Arbitration Convention is barred.
Initiation of the MAP
The taxpayer(s) or its/their legal representatives have to submit a request for a mutual agreement containing the full set of information required by the MAP Guidance (PDF, 981 KB) and /or Section 9 EU-TDRA, respectively, within the time frame foreseen by the legal instrument(s) being relied on.
The MAP request pursuant to a DTC or the EU Arbitration Convention should, as a rule, be submitted to the State or Jurisdiction of which the taxpayer is a resident. By contrast, the EU-TDRA generally requires the submission of the request to the competent authority of each of the States or Jurisdictions involved by each taxpayer involved.
A MAP request pursuant to a DTC or the EU Arbitration Convention must be submitted by post to the following address:
Tax Authority for Large Traders
Legal unit on Mutual Agreement Procedures
PO Box 251
1000 Vienna, Austria
The MAP request pursuant to the EU-TDRA must be submitted electronically, on the FinanzOnline platform. For additional information on the filing and content of such a request, see explanations in section “Internationales Verständigungsverfahren” on the FinanzOnline platform. If an electronic filing is not possible due to the lack of the technical requirements or access rights to the platform, then the request has to be submitted by post to the above-mentioned address and using the following forms:
- Complaint according to Section 8 paragraph 2 of the EU Tax Dispute Resolution Act
- Complaint according to Section 8 paragraph 2 of the EU Tax Dispute Resolution Act (legal persons)
After receipt of the MAP request, the competent authority will evaluate whether the requirements for the initiation of the MAP are fulfilled. The MAP will only be initiated if all formal and material requirements are fulfilled and Austria cannot unilaterally resolve the dispute.
The States or Jurisdictions involved in the dispute bear their own costs. The costs incurred by the taxpayer are not refunded. The submission of MAP requests is free of charge.
Suspension of collection and treatment of interest during a MAP case
There are two different alternatives for provisional relief during a MAP in Austria:
- The suspension of collection or
- Interest claims.
1. Suspension of collection
A taxpayer can request a suspension of collection for the duration of the MAP or arbitration procedure pursuant to any legal basis in accordance with Sec. 212a para. 2a FFC (Federal Fiscal Code). The requirements are as follows:
- The collection of taxes has not yet taken place;
- No deferment (in accordance with Sec. 212 FFC) or suspension of collection (in accordance with Sec. 212a para. 1 FFC) has been requested;
- There is no risk of non-recoverability in accordance with Sec. 212a para. 2 FFC; and
- No exception pursuant to Sec. 212a para. 6 FFC applies.
Process: The first step is the submission of a MAP request. At the same time or after this request, the taxpayer must submit a request pursuant to Sec. 48 para. 1 FFC to the competent authority (see above). The competent authority will issue a notice under Sec. 48 para. 1 FFC. The taxpayer must then submit a request for suspension of collection in accordance with Sec. 212a para. 2a FFC to the tax office that has competency over him. The notice in accordance with Sec. 48 para. 1 FFC must be submitted along with the request.
Effect: The taxes due are suspended until the end of the MAP or, if an arbitration request is submitted immediately after that, until the end of the arbitration procedure. The ending of the suspension period is stipulated via a notice of the tax office responsible in the case.
2. Interest claim
If the taxes at issue in the MAP / arbitration case have been (partially) paid, then a suspension of collection cannot be requested for the amount already paid. However, the taxpayer can claim interest if the amount due in Austria is reduced as a result of the MAP / arbitration procedure.
Process: The taxpayer must first submit the MAP request. At the same time or afterwards, he must submit a request pursuant to Sec. 48 para. 1 FFC to the competent authority. After the competent authority has issued a notice pursuant to Sec. 48 para. 1 FFC, the taxpayer must forward this notice to the tax office with competency together with an interest claim pursuant to Sec. 205a para. 2a FFC.
Effect: Interest pertaining to the difference between the original amount of taxes due and the new reduced amount pursuant to the MAP / arbitration procedure is paid out for the period beginning with the initiation of the MAP and ending with the date of the tax notice reducing the tax burden.